Property

Property: Southern Qld buying for drought mitigation

Beef Central, August 21, 2019

Robina Downs, a 13,780ha freehold property 110km south-east of Cunnamulla sold for $2.5 million ($73/ac) in May to a NSW grazier.

 

In Herron Todd White’s August monthly rural property wrap, Toowoomba-based valuer Stephen Cameron looks at recent property purchases for drought mitigation in southern Queensland

 

THERE is plenty of talk regarding the current seasonal conditions and how they are impacting on property market confidence at present.

Much of Southern Queensland that did benefit from storm rainfall in late March and early April has now hayed-off and very little body of feed is available, forcing many producers to continue to destock.

Areas where surface water is critical for stock needs is becoming a real issue for some graziers. Poor seasonal conditions are also now impacting on the security of domestic water for townships in the Southern Downs.

Presently Leslie Dam is at 6.32 percent of capacity or about 6,700 megalitres, while Storm King Dam that supplies Stanthorpe has 550 megalitres in storage. In the Lockyer Valley, water tables have dropped and irrigators have either fallowed country or reduced irrigable farming areas in conjunction with adopting water efficiency measures through reducing pump sizes.

In some instances, water is required to be re-lifted from turkey nests, resulting in increased cost of production. A comment made by a Lockyer Valley lucerne farmer that has merit was that he was making better returns when water was available, but selling lucerne square bales at $12, rather than at present when he is receiving $25 a bale, but requiring compounded pumping costs and water usage to achieve a cut.

Given how the seasons have been over the past five years, many purchasers who are expanding are considering what type of asset complements their existing operation by production, but with drought mitigation firmly in their thought processes.

Many producers have been forced to look to the outer region, where northern New South Wales graziers have purchased country in the sought-after Taroom region.

Similarly, a Central Queensland grazier purchased Illuka near Taroom at auction in early July. We are also seeing graziers in the same Local Government Areas purchasing country purely as a drought strategy to secure their core breeding herd, as there are limited opportunities to agist in Southern Queensland and Northern NSW.

So what are the drivers that determine a suitable area for land purchase for drought mitigation? It obviously depends on the location and country type of the existing asset. However broadly in Southern Queensland many graziers who have existing finishing country would typically seek out a Mulga block or a forest grazing country, or vice versa.

In the present market where seasonal conditions have been unfavourable, the focus is now on reliability of rainfall, but as landholders move further east, affordability becomes a limiting factor – especially under the current strong market conditions.

It’s likely that while seasonal conditions remain unfavourable, future property market transactions will continue to revolve around obtaining further scale, and how the strategic location of a property can provide some form of drought strategy.

The short-term climate outlook based on the recent trends in the Southern Oscillation Index indicates that seasonal conditions will remain very dry for the period up to the end of spring.

Some recent market transactions in South Western Queensland include:

  • Illuka at Taroom, a 3185ha property sold at auction for $13.9 million ($1,766/ac) to a Central Queensland grazier.
  • Sandford Park, a 16,157ha freehold property south of Charleville with frontage to the Warrego River sold at auction for $2.6 million ($65/ac).
  • Robina Downs, a 13,780ha freehold property 110km south-east of Cunnamulla sold for $2.5 million ($73/ac) in May to a NSW grazier.

Overall the broad market trends in southern Queensland, despite the present poor seasonal conditions, remain strong.

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Property news headlines emailed to you -
FREE!